Microsoft Corp is considering a bid for Yahoo Inc, resurfacing as a potential buyer after a bitter and unsuccessful fight to take over the Internet company in 2008, sources close to the situation said on Wednesday.
Microsoft joins a host of other companies looking at Yahoo, which has a market value of about US$18 billion and is readying financial pitch books for potential buyers, they said.
Those companies include buyout shops Providence Equity Partners, Hellman & Friedman and Silver Lake Partners, as well as Chinese e-commerce giant Alibaba (阿里巴巴) and Russian technology investment firm DST Global, the sources said.
Yahoo shares jumped 10.1 percent on the news to close at US$15.92 on NASDAQ, but fell back to US$15.46 in extended trading. Microsoft shares ended 2.2 percent higher at US$25.89.
Microsoft may seek a partner to go after Yahoo, one of the sources said, without identifying any parties.
No decision has been made and a bid may not materialize as there are internal divisions at the software company on whether it should pursue Yahoo again, a high-ranking Microsoft executive said.
One camp inside Microsoft that supports the deal believes it would obliterate AOL Inc as a competitor and create a strong Web portal that offers better products to audiences, advertisers and end users, the executive said.
However, another camp is against the deal, feeling that if Microsoft is going to invest billions of dollars in an acquisition it should be one that has more growth potential. Microsoft last tried buying Yahoo in 2008, offering to pay as much as US$47.5 billion or US$33 a share.
“Yahoo’s value hasn’t grown in years and some executives feel we should buy something that is more forward-looking,” said the executive, who spoke on condition of anonymity.
Yahoo, Microsoft and the other potential buyers declined to comment.
Any auction process for Yahoo is still in the early stages and the company’s financial advisers — Goldman Sachs and Allen & Co — are preparing to send financial information to potential bidders, sources have said previously.
Shortly after ousting Carol Bartz as chief executive early last month, Yahoo said it was exploring strategic alternatives after receiving “inbound interest” from a number of parties.
The once-dominant Internet pioneer is pursuing parallel tracks, sounding out deal options as well as engaging in a search for a new chief executive.
Yahoo would be a big bite for any single private equity firm, -especially at a time when financing markets for leveraged buyouts have dried up.
Industry sources said private equity firms could take over the US operations and sell Yahoo’s Asian assets to a buyer such as Alibaba.
“There are many reasons why this thing probably makes sense,” said Sid Parakh, analyst at fund firm McAdams Wright Ragen. “If you strip out the variety of assets Yahoo owns, you are pretty much paying nothing for the core business.”
If Microsoft fully combined its Bing Internet search business with Yahoo’s, it would give it more than 30 percent of the US search market and make it a credible competitor to Google, Parakh said.
Under a 10-year deal struck in 2009, Microsoft’s Bing already powers Yahoo search, but it cedes 88 percent of resulting advertising revenue back to Yahoo.
“You would get better scale on the search business and you could probably cut a good amount of the cost, not just on search side but also on the display side,” Parakh said. “There would be economies of scale.”